Gary Gensler Warns of Bitcoin Risks Ahead of ETF Decision

Gary Gensler, the head of the SEC, has cautioned about the volatile nature of crypto assets. His thread appeared two days before the decision on spot Bitcoin ETFs.

1⃣ Those offering crypto asset investments/services may not be complying w/ applicable law, including federal securities laws. Investors in crypto asset securities should understand they may be deprived of key info & other important protections in connection w/ their investment.

— Gary Gensler (@GaryGensler) January 8, 2024

The official did not link his post to the mentioned event. Industry participants saw this as an additional signal of an imminent positive decision. The recommendations followed firms submitting updated proposals for the product launch.

Previously, the agency’s Office of Investor Education warned about the risks of digital assets. 

“[Firms] offering crypto-related services may not comply with applicable law. Investors […] should be aware that they may not be provided with key information and […] means to protect their investments,” Gensler noted.

The SEC head also reminded of the risks posed by crypto service providers.

3⃣Fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams. These investments continue to be replete w/ fraud- bogus coin offerings, Ponzi & pyramid schemes, & outright theft where a project promoter disappears w/ investors’ money.

— Gary Gensler (@GaryGensler) January 8, 2024

“Several major platforms have become insolvent and/or lost value. […] Fraudsters continue to exploit the rising popularity of crypto assets to lure retail investors into scams. These offerings remain rife with fraud — bogus coin offerings, Ponzi schemes, and pyramid schemes, as well as outright theft,” he explained.

Gensler’s recent comments echoed points from his December interview with CoinDesk.

Analysts at CryptoQuant have suggested that the approval of a Bitcoin ETF could raise the asset’s price to $54,000. Morgan Creek Digital co-founder Anthony Pompliano warned that the launch of the instrument would not double the price of the leading cryptocurrency overnight.

Conversely, JAN3 CEO Samson Mow predicted that digital gold could rise to $1 million within a few “days or weeks” following ETF approval.